Any economy comprises a relation among agents, goods and services. Each good and service in the economy, with the exception of the most primitive goods and services, consists of combinations of other goods and services. Goods and services can be complements or substitutes to other goods and services. Complements are sets of goods or services which are used jointly to produce other goods or services. For example, the screw and the screw driver are complementary goods. In contrast, substitutes are sets of goods or services which might substitute for one another in a given production technology or consumption good. For example, the screw and nail are substitute goods. Complementary goods and services must be used together to create value in the economy. See The Origins of Order, Kauffman, S., Oxford University Press (1993), Chapter 10, which is incorporated herein by reference.
Most goods and services create value in the economy via positive functional interactions with their complements and via competition with their substitutes. Further, most new goods and services enter the economy as complements or substitutes for existing goods and services. The goods and services in an economy themselves offer new opportunities to invent yet further goods and services. Thus, the economy transforms as new goods and services drive older goods and services out of the economy. See The Origins of Order, Chapter 10.
For example, the invention of the automobile led to the requirement for other goods and services ranging from paved roads, traffic lights, and traffic adjudication systems to oil refineries, gasoline stations, automobile repair facilities, parts manufacturers, and emission control devices. In contrast, the invention of the automobile led to elimination of the horse for most transport. In turn, the elimination of the horse led to the elimination of stables, public watering troughs, blacksmiths, the Pony Express, etc. See The Origins of Order, Chapter 10.
Accordingly, much of economic growth is driven by the persistent creation of novel economic opportunities in the interstices between existing goods and services, where new goods and services can enter the economy. The rate of formation of new economic niches is an increasing function of the total diversity of goods and services in the economy.
To succeed within the economy, companies and other economic agents need to know information about the economy to identify new economic niches, new growth opportunities and new locations of strategic competition. Specifically, companies and other economic agents need to know the relation among the agents, goods and services of the economy and their position within the economy. Similarly, economic agents must achieve reasonable concepts about how the relation among the agents, goods, and services of the economy and their position within the economy will change as new goods and services enter and old ones go extinct in small and large Shumpeterian gales of creative destruction.
A previous method has attempted to identify new economic niches by combining goods and services with generative tools and by selecting a subset of the resulting set of new goods and services with a utility function which measures economic value. See Origins of Order, Chapter 10. This method generates new goods and services by representing them with binary strings and by performing operations among the strings to create new strings.
However, none of the prior art methods constructs an economic web, generates new goods and services to analyze an economy, and identifies new market niches using the functional relations among the goods and services in the economy. Accordingly, there is a need for a method and system that effectively and rapidly gathers data on the functional relations within an economy and synthesizes an economic web model defining the local structure of the economic relations within the vicinity of a company or other economic agent. Further, there is a need for a method and system that can analyze the functional structure of the economic web model to identify new niches, new growth opportunities and new locations of strategic competition for a company or other economic agent.